The government is planning to increase the outlay for the rare earth magnet manufacturing scheme to over Rs 5,000 crore, up from the originally proposed Rs 1,350 crore. In addition, the annual production target is likely to be quadrupled — from 1,500 metric tonne to around 6,000 MT.
The move is part of a broader push to expand domestic capacity in the strategically critical segment of rare earth permanent magnets, which are widely used in electric vehicles, wind turbines, electronics, and defence systems. Official sources said the revisions aim to reduce the risk of project failure by expanding industry participation and shielding the sector from global supply disruptions.
More players, broader scope
“The revision is aimed at bringing more players under the ambit of the scheme. By increasing the outlay and expanding participation, the government hopes to become self-reliant in this strategically important segment,” officials said.
Rather than limiting incentives to just two manufacturers, the revised plan proposes support for at least five, with each eligible for incentives on up to 1,200 metric tonnes of annual output, sources added. The changes follow a suggestion from the Prime Minister’s Office (PMO), which had earlier asked the Ministry of Heavy Industries (MHI) to broaden the scheme’s scope.
The proposed contours are expected to better align with projected demand. Industry estimates suggest current domestic demand for rare earth magnets stands at about 4,000 metric tonnes annually and could double by 2030. The revised output target is seen as sufficient to meet this anticipated growth.
Import dependence triggers urgency
During stakeholder consultations, several manufacturers urged the MHI not to restrict participation to just a few players. Companies including JSW Group, Mahindra Group, Kalyani Group, Sona Comstar, Midwest Advanced Materials, Entellus, and Proterial participated in the discussions.
The scheme, expected to run for seven years, will be open to both public and private sector entities capable of undertaking end-to-end magnet production.
India is estimated to have 6.9 million metric tonne of rare earth reserves but mined only 2,900 tonne in 2024. In contrast, rare earth magnet imports surged to 53,000 tonnes in FY25. Currently, IREL (India) Ltd is the sole public sector entity engaged in rare earth mining and refining.
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